Hotel and gaming group Sun International has become the latest South African business to pull out of Nigeria because of weak economic growth and clashes with regulators and Nigerian shareholders.
“The board has decided to exit Nigeria and steps will be taken to achieve this in a manner that does not erode further value,” the company said in a statement.
“Continued setbacks in Nigeria as well as the ongoing shareholder dispute have frustrated all attempts to develop and improve the property,” it added.
In January, Nigeria’s Economic and Financial Crimes Commission (EFCC) launched a probe into Sun’s initial investment in the Tourist Company of Nigeria (TCN) , which owns and operates the 5-star Federal Palace Hotel in Lagos.
Sun International, which also reported on Monday a 20 percent fall in earnings for the year to June, said The Federal Palace had been hit by slow economic growth, low oil prices, the threat from militant group Boko Haram and a weakening naira.
Thegroup bought a 49 percent stake of the Nigerian Stock Exchange-listed TCN in 2006, becoming the largest single shareholder. In recent years, Sun has been drawn into a dispute within its fellow shareholder, the Ibru family.
The company’s decision to exit Nigeria follows food and clothing retailer Woolworths and Tiger Brands, which sold its loss-making Nigerian arm to Dangote Industries.
Analysts said Sun International’s dispute with fellow investors was at least as important in its decision to leave.
“They are in a way stuck in a problematic arrangement on the property and it’s been very difficult for them to create value there. It certainly makes sense for them to reduce exposure to Nigeria,” said Avior Capital Markets analyst De Wet Schutte.
“Nigeria is a difficult place to build a business.”
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